You
don’t have a spending plan.
You have often heard that failing to plan is
planning to fail. Well, do you have a spending plan? If not then you are on the
road to financial disaster. We live in a world of limited resources and
unlimited wants. Its only logical the that you have a carefully considered plan
on how each shilling that you make will be spend. According to best selling author, Larry Winget, one of the reason you are broke is simply
because you are stupid. You know where money comes from and you spend it like
it will fall from the sky the minute you need it. The famous Pit-bull of
Personal Development argues that only fools spend what they have today
with little or no regard for what they will do tomorrow. By not having a
budget, you also spend your money on non priority items at the expense of
priority items. I have seen friends going out to “have fun” with all the money
they have when their house rent has not been paid. Once they have fun, they
come back to reality the following day and are then forced to borrow in order
to pay for the house rent. If you want to achieve financial independence then,
start creating a budget and more importantly have the discipline to follow it
through.
You
spend more than you earn
The most basic financial principle you
can grasp is that you have to spend less than you earn. Spend the whole of it,
and you are living for your stomach, spend more than you earn and you will live
in debt forever. If it’s not possible to
reduce your expenses to meet your income, you have the option of increasing
your income. If you are employed, try doing some side business, try utilizing your
weekends for some productive and income generating activities. If you can
reduce your expenditure or increase your income, then what I can tell you is
that your financial independence dream will remain just a dream.Learn Invest Deputy Head, Allison Kade says that
the reason you are broke is really because you don’t have enough income to meet
your expenses. You want a big house, a flashy car and a life of luxury but your
salary can barely support a single trip to the beach. Winget says that in order
to break free of your financial limitations, you need to stop getting by and
start getting ahead. Get out of your comfort zone and do something about your
financial goals.
You
Don't Have a Savings Account
Another reason you are far from
financial independence is because all your money goes into your Personal consumption
account. Having all your income deposited straight into this account
encourages you to overspend. As long as you are able to withdraw your cash, you
will be free to do so until there is nothing left. "After all," says
Kade, "the money is right there, ripe for the spending, and saving cash
for the future requires transferring it separately to your savings
account." She notes that a better alternative would be to set up automatic
deposits straight from your pay cheque into your various savings accounts. Most
local banks offer this option. As long as you can access that money in your
bank account, even via MPESA, then stop lying to yourself that you are saving.
It doesn’t work that way.
You're
in trapped in bad debt
Do you want to be financially free? Then,
avoid bad debts. Debt is like a hole that you keep digging until it becomes so
deep that you can’t get out. "Debt sucks," says Stella Nailantei, a participant
in a seminar I recently conducted. " It's the most uncomfortable
feeling in the world. I usually cant wait to pay up and be done. Most of us are trapped in the worst form of
debt, consumer debt. This is debt that has been incurred for non priority items
as explained above or for consumption purposes. Truth of the matter is, loans
should only be taken either for business or investment or only on emergencies of epic proportions.In stop
taking loans for lifestyle, I explained the difference between good and bad
debt and how you can use a loan to grow your wealth and move to financial independence.
Kindly like my face book page Stars of the future to join a community of winners who have opted
to make a positive change in their lives.
